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The 415 limit doesn't change - but catch-up contributions are not considered when applying the 415 limit. You have deferrals of 22,500. That exceeds the 402(g) limit by 4,000, so 4,000 of that is reclassified as catch-up. The remaining 18,500 deferral continues to be counted as annual additions. Then you make an employer contribution of 38,500. Add that to your 18,500 and you now have 57,000 in annual additions. This exceeds the 415(c) limit by 2,000 so 2,000 of your 18,500 deferral is reclassified as catch-up. So you end up with annual additions of 16,500 (deferrals) + 38,500 (employer) = 55,000 which satisfies 415, plus 4,000 (exceeded 402(g) limit) + 2,000 (exceeded 415(c) limit) = 6,000 catch-up contributions.

And at risk of beating the dead horse this is just another reason to always start your thinking with the 415 limit is what it is and then next ask yourself are any of the deferrals at catch up. That catches what Kevin is warning about vs thinking the 415 limit for a 50+ year old is the 415 limit plus catch up limit.

Thank you David; much appreciated right now. Interestingly, I went back and found the offending comment; here it is: "Sorry, but that's just not true. You can't have the participant elect, but you can have the employer "elect" by a proper plan amendment." I think that is a pretty tame comment, but each reads things in their own way. Peace to all; especially today.

How can you provide a summary of changes to a plan if you do not indicate what plan it pertains to?

The timing of deferrals becoming catch-up depends on the limit that triggers the catch-up. For 402(g)/401(a)(30), deferrals in excess of the deferral limit become catch-ups as they are deferred. Catch-ups triggered by 415 or ADP testing become catch-ups at the end of the plan year. The rules are in 1.414(v)-1. There are mentions of timing in (b) and (c). As C.B. pointed out, In your case, with $22,500 contributed in 2018, the last $4,000 of deferrals made in 2018 became catch-up when deferred. Before the PS allocation at the end of the plan year, the participant still has $2,000 of the 2018 catch-up limit available. When the PS allocation takes the participant to the 415 limit, the next $2,000 of PS causes $2,000 of the $18,500 of regular deferrals to be reclassified as catch-up. The participant ends the year with $16,500 of regular deferrals, a PS of $38,500 and catch-up of $6,000. Be careful about assuming that everyone age 50 can get to $61,000 for 2018. That only works for those who defer at least the full catch-up limit during the year. Someone age 50 who doesn't defer can only get to $55,000.

Just a clarification . . . if the loans are being offset due to a failure to pay the loan in full upon termination of employment, then that is treated as an actual distribution under the Code and a 402(f) tax notice would be needed. If the loans are being treated as a deemed distribution rather than being offset from the participant's account, then I agree with the above.

Here's the link to the IRS guidance on this topic: https://www.irs.gov/retirement-plans/self-correct-defective-403b-plan-provisions-during-the-remedial-amendment-period

Ed, you're one of the very most valuable contributors to our community -- 236 upvotes by your peers and 2,386 posts. Congratulations, and thank you! We are a community of many people so there are going to be differences in style that come across to the receiver as annoying or even rude. I once read that one out of 10 people can hardly to stand to be around us -- so I try to admire the 9 out of 10 with obviously good judgment and let go of trying to please the 10th one (though I wonder who you are!). I think of Larry (who also is one of the most prolific and valuable contributors on the message boards) as one of the long poles in the pension industry circus tent -- or maybe the grizzled chief petty officer on the navy's biggest carrier, who's seen pretty much everything and sometimes barks out orders but you give him wide berth because he's almost always right and he's not in the mood to chat. I've never seen a criticism that wasn't backed up by experience or citations -- so by getting to the point and lobbing in a comment he may be doing a tremendous service, especially if it turns out that some kind of liability-causing mistake is avoided, or some kind of money-making opportunity turns out to be the result. He's particularly willing to take his valuable time to get down into the weeds on a particular poster's factual situation, rather than contributing only some citation or general principle. I always give thanks for a griping customer, because he's probably giving me some valuable information that a dozen others are thinking but haven't written to me about. Anyway, I know there are passions (I actually have quite a problem with my own temper and sensitivity), and that it can take real effort to refrain from name-calling, and people might even be more sensitive to it nowadays given that one can turn on pretty much any national media and hear non-stop name calling and snarkiness. We also have visitors who aren't used to seeing the rigorous give-and-take that sometimes happens in a message thread, and we don't want to run off those who might be particularly conflict-avoidant. One such visitor and potential message board contributor wrote to me yesterday and politely complained. Because I believe it's important that a community regulate itself and not have some political correctness censor hanging overhead, I edit messages only rarely, where there is a name called or some kind of profanity -- everything else is fair game, including being frank and critical. But everybody must remember the public is watching, reputations are important, people are a whole lot more tender than generally assumed, and the point of everybody being here is to exchange questions and answers so that the plan participants get what they're supposed to and our employer-customers get the best and most accurate service. There are going to be sparks and loud squeaks as the big wheels turn, but we're all on the same train heading in the same direction. <End of sermon> Thanks again, Ed, Larry, and everybody!